Blockchain instrument for transferable equity

ABSTRACT

Systems and methods for offering and purchasing tokenized securities on a blockchain platform meeting current and future federal, state, and offering and holding entity rules and regulations. Tokenized securities purchased during or after the tokenized securities offering are tradable on a secondary market. The server computer of the tokenized securities provides an automated transfer capability for tokenized securities holders.

CROSS-REFERENCES TO RELATED APPLICATIONS

The present invention is related to and claims priority from thefollowing U.S. patent documents: this application claims priority fromU.S. Provisional Patent Application No. 62/630,559, filed Feb. 14, 2018,which is incorporated herein by reference in its entirety.

BACKGROUND OF THE INVENTION 1. Field of the Invention

This invention relates to systems and methods for offering, purchasing,and reselling blockchain instruments for transferable equity. Moreparticularly, the present invention provides systems and methods foroffering, purchasing, and reselling tokenized securities on a blockchainplatform.

2. Description of the Prior Art

A blockchain is a distributed database storing a registry oftransactions and records across a peer-to-peer network. The registry isreplicated on every computer that uses the network. The transactions andrecords are built into blocks and secured through cryptography. Eachblock contains a timestamp and a hash link to a previous block. Acryptocurrency is a digital medium of exchange using cryptography tosecure the transactions and to control the creation of additional unitsof the cryptocurrency. The blockchain technology is the underlyingtechnology for the first cryptocurrency Bitcoin which was created in2009. Many different cryptocurrencies have been created since then. Aninitial coin offering (ICO) has become a wildly popular means ofcrowdfunding by launching a new cryptocurrency. During the ICO, acompany offers a new cryptocurrency or token which can be used forproducts or services on their platform in the future in exchange forcryptocurrencies of immediate, liquid value, such as Bitcoin andEthereum. ICOs have provided a means by which start-up companies canavoid costs of regulatory compliance and intermediary financialorganizations, while increasing risk for investors. ICOs may falloutside existing regulations or may need to be regulated depending onthe nature of the project. Some jurisdictions, such as China and SouthKorea, have banned ICOs altogether. In the United States, the Securitiesand Exchange Commission (SEC) has been sending out warnings regardingICOs and cryptocurrencies and indicating tokens offered during an ICOmay be considered securities.

Exemplary US Patent Documents relevant to the prior art include:

U.S. Pat. No. 9,704,143 for “cryptographic currency for securitiessettlement” by inventor Paul Walker et al., filed Oct. 30, 2014,describes security settlement in financial markets and cryptographiccurrencies. Particular portions of the present disclosure are directedto a cryptographic currency protocol and to a cryptographic currencythat includes a positional item. The cryptographic currency protocolsupports a virtual wallet that, in various embodiments, is a securityand cash account for storing and managing the cryptographic currency.Opening a transaction via the virtual wallet to transfer thecryptographic currency is a strong guarantee of the availability offunds in the virtual wallet because, e.g., funds are not transactedunless the commit phase is successful.

U.S. Publication No. 2016/0012465 for “System and method fordistributing, receiving, and using funds or credits and apparatusthereof” by inventor Jeffrey A. Sharp, filed Feb. 8, 2015, describes asystem for performing various methods of sending, receiving,distributing, and utilizing funds and/or credits is disclosed. In manyembodiments, various communications platforms and/or protocols may beemployed. Methods of sending funds or credits may be practiced indifferent environments, including physical and electronic environments.According to some preferred embodiments, users may perform a variety oftransactions including various gifting functions, re-gifting functions,and social interactions simply, through various types of electroniccommunications, including, but not limited to electronic messaging.

U.S. Publication No. 2017/0308893 for “Asset and obligation managementusing flexible settlement times” by inventor Walter Eric Saraniecki,filed Aug. 25, 2016, describes a system and method for managing atransaction having at least one enduring obligation and at least onerepo obligation with respect to a plurality of assets, where the systemincludes at least one signing server for authorizing the at least oneenduring obligation and the at least one repo obligation.

U.S. Publication No. 2017/0085545 for “Smart Rules and SocialAggregating, Fractionally Efficient Transfer Guidance, ConditionalTriggered Transaction, Datastructures, Apparatuses, Methods and Systems”by inventor Timothy Lohe et al., filed Jul. 14, 2016, describes theSmart Rules and Social Aggregating, Fractionally Efficient TransferGuidance, Conditional Triggered Transaction, Datastructures,Apparatuses, Methods and Systems (“SOCOACT”) transforms smart contractrequest, crypto currency deposit request, crypto collateral depositrequest, crypto currency transfer request, crypto collateral transferrequest inputs via SOCOACT components into transaction confirmationoutputs. A selection of a crypto smart rule type for a crypto smart ruleassociated with an aggregated crypto transaction trigger entry may beobtained from a user. A crypto smart rule generator user interface (UI)for the selected crypto smart rule type may be provided. Selections of athreshold constraint and of an aggregated blockchain oracle for thecrypto smart rule may be obtained from the user via the UI. Theaggregated crypto transaction trigger entry may be generate based on theselections and instantiated in a socially aggregated blockchaindatastructure.

U.S. Publication No. 2017/0221052 for “Computationally EfficientTransfer Processing and Auditing Apparatuses, Methods and Systems” byinventor Xinxin Sheng et al., filed Apr. 12, 2017, describes theComputationally Efficient Transfer Processing, Auditing, and SearchApparatuses, Methods and Systems (“SOCOACT”) transforms smart contractrequest, crypto currency deposit request, crypto collateral depositrequest, crypto currency transfer request, crypto collateral transferrequest inputs via SOCOACT components into transaction confirmationoutputs. Also, SOCOACT transforms transaction record inputs via SOCOACTcomponents into matrix and list tuple outputs for computationallyefficient auditing. A blockchain transaction data auditing apparatuscomprises a blockchain recordation component, a matrix Conversioncomponent, and a bloom filter component. The blockchain recordationcomponent receives a plurality of transaction records for each of aplurality of transactions, each transaction record comprising a sourceaddress, a destination address, a transaction amount and a timestamp ofa transaction; the source address comprising a source wallet addresscorresponding to a source digital wallet, and the destination addresscomprising a destination wallet address corresponding to a destinationvirtual currency wallet; verifies that the transaction amount isavailable in the source virtual currency wallet; and when thetransaction amount is available, cryptographically records thetransaction in a blockchain comprising a plurality of hashes oftransaction records. The Bloom Filter component receives the sourceaddress and the destination address, hashes the source address using aBloom Filter to generate a source wallet address, and hashes thedestination address using the Bloom Filter to generate a destinationwallet address. The Matrix Conversion component adds the source walletaddress as a first row and a column entry to a stored distance matrixrepresenting the plurality of transactions, adds the destination walletaddress as a second row and column entry to the stored distance matrixrepresenting the plurality of transactions, adds the transaction amountand the timestamp as an entry to the row corresponding to the sourcewallet address and the column corresponding to the destination walletaddress; and generate a list representation of the matrix, where eachentry in the list comprises a tuple having the source wallet address,the destination wallet address, the transaction amount and thetimestamp.

U.S. Publication No. 2017/0103391 for “Digital asset intermediaryelectronic settlement platform” by inventor Donald R. Wilson Jr. et al.,filed Dec. 22, 2016, describes a digital asset settlement methodincludes receiving from a first user an authorization for a conditionaltransaction involving a digital right, which has been digitized on adistributed ledger, matching the authorization for transaction from thefirst user with an authorization for transaction from at least one otheruser, settling the transaction between at least the first and otherusers if the conditional is met, and memorializing the settledtransaction on the distributed ledger.

SUMMARY OF THE INVENTION

In one embodiment of the present invention, systems and methods foroffering and purchasing tokenized securities on a blockchain platformare provided. At least one user device for at least one investor isconfigured and constructed in network communication with a servercomputer of a tokenized securities offering entity. The at least oneuser device transmits user input data to the server computer of thetokenized securities offering entity via a graphical user interface(GUI). The server computer of the tokenized securities offering entitytransmits a link to at least one accreditation agency to the at leastone user device for investor accreditation. The server computer of thetokenized securities offering entity accesses to and synchronizes withat least one database of the at least one accreditation agency in realtime, and creates an up-to-date whitelist of accredited investors basedon accreditation information obtained from the at least one database ofthe at least one accreditation agency. The server computer of thetokenized securities offering entity verifies the accreditation statusof the at least one investor and sends a link to at least one tokenizedsecurities contract deployed on the blockchain platform. The at leastone user device sends an acceptance message after the at least oneinvestor review documents included in the at least one tokenizedsecurities contract on the blockchain platform. The at least one userdevice transmits a predetermined amount of cryptocurrency from auniquely identified account or cryptocurrency account or a digitalwallet of the at least one investor to an escrow account of thetokenized securities offering entity on the blockchain platform. In oneembodiment, the at least one tokenized securities contract has an escrowfunction. At least one security token is sent to the uniquely identifiedaccount or cryptocurrency account or the digital wallet of the at leastone investor, and the predetermined amount of the currency is sent to auniquely identified account or a digital wallet of the tokenizedsecurities offering entity.

In another embodiment, the present invention provides systems and methodfor selling (or reselling) tokenized securities on the blockchainplatform. Tokenized securities purchased during the tokenized securitiesoffering (or through existing manual means) are tradable on a secondarymarket usually after a rest period. In another embodiment, the servercomputer of the tokenized securities offering entity provides a tokentransfer system for selling (or reselling) security tokens issued by thetokenized securities offering or holding entity.

These and other aspects of the present invention will become apparent tothose skilled in the art after a reading of the following description ofthe preferred embodiment when considered with the drawings, as theysupport the claimed invention.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 illustrates a system of purchasing security tokens according toone embodiment of the present invention.

FIG. 2 is a timeline throughout a life cycle of BITE tokens according toone embodiment of the present invention.

FIG. 3 illustrates interactions between different entities during asecurity token offering according to one embodiment of the presentinvention.

FIG. 4 illustrates a token purchasing process on blockchain during asecurity token offering according to one embodiment of the presentinvention.

FIG. 5 is a timeline throughout a life cycle of tokenized securitiesaccording to one embodiment of the present invention.

FIG. 6 illustrates transactions and contracts recorded in blocks on theEthereum blockchain according to one embodiment of the presentinvention.

FIG. 7 illustrates transactions for taken contract between an investorand a security token offering entity on Ethereum blockchain according toone embodiment of the present invention.

FIG. 8 lists investor documents in a token purchase process according toone embodiment of the present invention.

FIG. 9 is a tokenized securities offering timeline according to oneembodiment of the present invention.

FIG. 10 is a flowchart of a token purchase process according to oneembodiment of the present invention.

FIG. 11 illustrates a proxy contract according to one embodiment of thepresent invention.

FIG. 12 illustrates an escrow contract according to one embodiment ofthe present invention.

FIG. 13 illustrates an aggregate contract according to one embodiment ofthe present invention.

FIG. 14 illustrates a typical contract according to one embodiment ofthe present invention.

FIG. 15 is a diagram illustrating a signup process for offeringtokenized securities on a blockchain platform according to oneembodiment of the present invention.

FIG. 16 is a diagram illustrating a trading process for a tokenizedsecurities seller on a blockchain platform according to one embodimentof the present invention.

FIG. 17 is a schematic diagram illustrating a cloud-based system of thepresent invention.

FIG. 18 is another schematic diagram illustrating a cloud-based systemof the present invention.

DETAILED DESCRIPTION

The blockchain technology is based on existing communication protocols(e.g., HTTP, RPC), cryptography (grown from Public key cryptography in1976), distributed peer-to-peer sharing mechanisms (e.g., Napster,bitTorrent), and a distributed set of databases kept in synchronizationbased on time. The blockchain technology is a technology thatpermanently records events or transactions on a network in atransparent, auditable, and irrefutable way. A blockchain ledger isstored on each blockchain node participating in or comprising a network.Blockchain nodes include, but are not limited to servers, mobiledevices, work stations, or any networked client that can interface withan IP-based network and can operate an operating system capable ofprocessing blocks. Blockchain is a loose specification rather than aspecific implementation, which is capable of unlocking monopoly powerover information in infrastructure systems for telecommunications,healthcare, finance, energy, and government. Blockchain alsodisintermediates “middle men” such as broker dealers, banks, transferagents, or any third party in information or transactions that areutilized for trust in the transmittal of data or the execution of atransaction. In an introduction to blockchain applications in TheBusiness of Blockchain by William Mougayar (2016), which is incorporatedherein by reference in its entirety, it is established that just as theWeb could not exist without the Internet, blockchains could not existwithout the Internet, and thus, the use of blockchains within thesystems and methods of the present invention provide that it is notmerely an abstract idea, since it is inextricably tied to Internettechnology.

A smart contract is a computer protocol intended to digitallyfacilitate, verify, or enforce the negotiation or performance of acontract. In the context of blockchain, smart contracts areself-executing codes on a blockchain that automatically implements theterms of an agreement between parties. Tokenized securities contractsdeployed on a blockchain platform by a tokenized securities offeringentity are based on the smart contract technology.

The present invention provides systems and methods for offering,purchasing, and reselling blockchain instruments for transferableequity. In one embodiment, the blockchain instruments for transferableequity are tokenized securities offered and purchased on a blockchainplatform. In one embodiment, the blockchain instruments for transferableequity are tokenized securities held by an entity (“holder entity”) thatare available for sale by existing investors to purchasers on ablockchain platform. In one embodiment, the blockchain instruments fortransferrable equity are tokenized securities, and each security tokenis unique. Advantageously, the systems and methods in the presentinvention disintermediate brokers in buying and selling securities andother financial instruments.

In one embodiment of the present invention, systems and methods foroffering, purchasing, and reselling tokenized securities on a blockchainplatform are provided. At least one user device for at least oneinvestor is in network communication with at least one server computeroperable for use by a tokenized securities offering entity. The at leastone user device transmits user input data to the at least one servercomputer operable for use by the tokenized securities offering entityvia a graphical user interface (GUI). The at least one server computeroperable for use by the tokenized securities offering entity transmits alink to at least one accreditation agency to the at least one userdevice for investor accreditation. The at least one server computeroperable for use by the tokenized securities offering entity accessesand synchronizes with at least one database of the at least oneaccreditation agency in real time, and creates an up-to-date whitelistof accredited investors based on accreditation information obtained fromthe at least one database of the at least one accreditation agency. Theat least one server computer operable for use by the tokenizedsecurities offering entity verifies the accreditation status of the atleast one investor and sends a link to at least one tokenized securitiescontract deployed on the blockchain platform. The at least one userdevice sends an acceptance message after the at least one investorreviews documents included in the at least one tokenized securitiescontract on the blockchain platform. The at least one user devicetransmits a predetermined amount of currency from a uniquely identifiedaccount or a digital wallet of the at least one investor to an escrowaccount of the tokenized securities offering entity on the blockchainplatform. In one embodiment, the at least one tokenized securitiescontract has an escrow function. At least one security token is sent tothe uniquely identified account or the digital wallet of the at leastone investor, and the predetermined amount of the currency is sent to auniquely identified account or a digital wallet of the tokenizedsecurities offering entity.

In one embodiment of the present invention, systems and methods forpurchasing tokenized securities are provided. At least one servercomputer operable for use by the tokenized securities offering (orholding) entity receives input data from an investor for registrationvia a GUI on a user device. An offering entity is one selling securitiesto raise capital, a holding entity is one that has already used thesecurities to raise capital, who now “holds” the tokenized securities.The input data includes a legal name and an e-mail address and otherrequired information. In one embodiment, other required informationfurther includes investor accreditation status. In one embodiment, theat least one server computer operable for use by the tokenizedsecurities offering entity provides a third-party agency link forinvestor accreditation via the GUI. Investor accreditation lasts acertain period of time and then expires. Renewal is needed in order tomaintain accredited investor status. The at least one server computeroperable for use by the tokenized securities offering entity is operableto access and synchronize with various data sources for investoraccreditation information automatically. The at least one servercomputer operable for use by the tokenized securities offering entitycreates and updates a whitelist of accredited investors based on theinvestor accreditation information from various data sources. The atleast one server computer operable for use by the tokenized securitiesoffering entity verifies the investor accreditation status of aregistered user based on the up-to-date whitelist. If the investoraccreditation status is included in the whitelist, the at least oneserver computer operable for use by the tokenized securities offeringentity transmits a link to at least one tokenized securities contractincluding various documents to the user device for review. The at leastone tokenized securities contract is deployed on a blockchain platform.In one embodiment, the link is sent to a cryptocurrency account or adigital wallet of the investor accessible by the user device. The userdevice transmits an acceptance message indicating the investor acceptsthe terms and conditions in the various documents included in the atleast one tokenized securities contract to the blockchain platform. Theuser device is then operable to purchase at least one security token viathe cryptocurrency account or digital wallet of the investor. Thus, apurchase order is complete and the at least one tokenized securitiescontract is let. In one embodiment, tokenized securities are at rest fora certain period of time before being traded in order to forbidbroker-dealer behaviors. A rest period is determined by a governingentity regarding securities law during which public or private tradingof securities are prohibited. For example, SEC rule 144 specifies that“if the company that issued the securities is a “reporting company” inthat it is subject to the reporting requirements of the SecuritiesExchange Act of 1934, then invested investors must hold the securitiesfor at least six months. If the issuer of the securities is not subjectto the reporting requirements, then invested investors must hold thesecurities for at least one year. In one embodiment, the at least oneserver computer operable for use by the tokenized securities offeringentity is operable to burn security tokens, which are tokenizedsecurities, left after the offering period. In another embodiment, thesever computer of the tokenized securities offering entity provides amarketplace where tokenized securities contracts are traded on theblockchain platform. The at least one server computer operable for useby the at least one tokenized securities offering entity includes one ormore server computers, which is standalone or network-based orcloud-based.

The description below provides details for steps of registering,verifying, reviewing, accepting, and investing according to oneembodiment of a method of purchasing tokenized securities during atokenized securities offering. In another embodiment, the order of theabove-mentioned steps varies. For example, but not for limitation, theverification step is after the invest step.

Register

In one embodiment, participants in tokenized securities offerings orpurchasing of existing tokenized securities include individuals,entities, joint tenancy, brokers, dealers, trusts and other legallyrecognized forms of organization or regulatory status. At theregistering stage, information required from an investor by the servercomputer of the tokenized securities offering entity includes legalname, country of residence, and email address. A privacy notice is sentto the investor via a user device. At least one uniquely identifiedaccount is required for the investor to participate in the tokenizedsecurities offering.

In one embodiment, the at least one uniquely identified account is ahash value generated by a hash algorithm in the blockchain. In oneembodiment, the at least one uniquely identified account is a blockchainaccount, a cryptocurrency account, or a digital wallet. In oneembodiment, the at least one uniquely identified account is generated byother mathematical algorithm (e.g., quantum mechanics).

In one embodiment, investor accreditation is required to participate inthe tokenized securities offering. In one embodiment, accreditedinvestor is defined in 17 CFR 230.501 (a). For example, accreditedinvestors include certain institutional investors, private businessdevelopment companies, entities with total assets in excess of$5,000,000, insiders, individuals with high net worth, individuals withhigh income, trusts having total assets in excess of $5,000,000, andentities owned entirely by accredited investors, according to specificrules in 17 CFR 230.501 (a). In one embodiment, a certificate ID forinvestor accreditation is required by the server computer forregistration. If the certification ID is not provided, the servercomputer of the tokenized securities offering entity sends a link to atleast one third-party accreditation agency (e.g., Verifylnvestor.com,EarlyIQ.com, Seedlnvest.com) to the user device via e-mail, textmessage, a social media account, or any other communication method,preferably with two-step authentication for user accreditation. The userdevice gives the server permission to access the investor accreditationinformation from the at least one third-party accreditation agency. Inanother embodiment, the registered user is enabled forself-accreditation by providing qualification documents, and the servercomputer of the tokenized securities offering entity is operable toreview the qualification documents and grant permission to theregistered user for participating in the tokenized securities offeringif the registered user is qualified as an accredited investor.

Under the federal securities laws in the US, a company or private fundmay not offer or sell securities unless the transaction has beenregistered with the Securities and Exchange Commission (SEC) or anexemption from registration is available. Certain securities offeringsthat are exempt from registration may only be offered to, or purchasedby, persons who are accredited investors.

In another embodiment, an investor is represented by a dealer or broker,and as such the dealer or broker will additionally provide theirregistration credentials such as their Financial Industry RegulatoryAuthority (FINRA) Central Registration Depository (CRD) numbers and SECnumbers.

Verify

The server computer of the tokenized securities offering or holdingentity is operable to access and synchronize with various data sourcesfor investor accreditation information. Investor accreditation statuslasts a certain period of time and renewal is needed to keep theinvestor accreditation status alive. The server computer of thetokenized securities offering entity automatically creates and maintainsan up to date whitelist of accredited investors based on the investoraccreditation information obtained from various data sources. The servercomputer of the tokenized securities offering entity is operable to addself-accredited investors to the whitelist if they pass a review processconducted by the tokenized securities offering entity. The whitelist ofaccredited investors includes legal names, social security numbers(SSNs), tax identification numbers (TINs), uniquely identified accounts(e.g. cryptocurrency accounts or digital wallet addresses, fiat currencybank account information), accreditation expiration dates, and otherinformation related to accredited investors. In one embodiment, thetokenized securities offering entity also creates and maintains ablacklist and blocks domain names, individuals, competitors and otherswith malicious intent from the token purchase or exchange.

The server computer of the tokenized securities offering entity comparesthe certificate ID and its issuing agency for the registered user withthe up-to-date whitelist and blacklist of accredited investors forverification. Once the accreditation status of the registered user isverified, the server computer of the tokenized securities offeringentity transmits a link to at least one tokenized securities contractincluding various document to a cryptocurrency account or digital walletof the registered user accessible to the user device for review. In oneembodiment, tokenized securities contracts are deployed on the Ethereumblockchain. An Ethereum account or an Ethereum wallet is required forpurchasing security tokens in the tokenized securities offering. Inanother embodiment, other blockchain platforms and/or othercryptocurrencies are used for offering and purchasing tokenizedsecurities. In another embodiment, the tokenized securities contractsare deployed on another blockchain platform. The blockchain platformsfor the tokenized securities contracts can be on a private and/or apublic network.

To confirm investor accreditation, the server computer of the tokenizedsecurities offering entity is operable to automatically access recordsrelated to accreditation in various databases, retrieve accreditationinformation automatically, and/or inquire financial institutions forinvestor accreditation status. In one embodiment, the tokenizedsecurities offering entity requires at least $1 million worth of Etheror any generally accepted cryptocurrencies or fiat currencies such asU.S. dollars in order to confirm accreditation. SEC regulationscurrently require accreditation based on U.S. dollars.

In one embodiment, if the investor is represented by a dealer or broker,the server computer of the tokenized securities offering entity isoperable to use a blockchain oracle to confirm the dealer or broker'sregistration credentials and automatically whitelist the dealer orbroker, if such representation is allowed in the offering or resale oftokenized securities.

In one embodiment, all accreditation information is recorded on variousdata sources over the Internet. The various data sources include but arenot limited to databases for accreditation service agencies andblockchains recording accreditations and other data feeds requiringinvestor accreditation. In one embodiment, a blockchain oracle isapplied to automatically retrieve accreditation information in real timefrom various data sources. An oracle, in the context of blockchains andsmart contracts, is an agent that finds and verifies real worldoccurrences and submits this information to a blockchain to be used bysmart contracts. This agent can be software, hardware, or human. In oneembodiment of the present invention, the oracle is a software-basedoracle and programmed to search for and parse text for accreditationinformation.

The server computer of the tokenized securities offering entity utilizesat least one blockchain oracle to retrieve accreditation information.Different data sources work differently for investor accreditation.Information retrieved from various data sources are normalized beforethe information is included in the whitelist. The server computer of thetokenized securities offering entity is operable to confirm theaccreditation status of a registered user automatically based on theup-to-date whitelist of accredited investors.

Review

Once a party has been allowed to view the disclosure documents, theoffering or holding entity manage which documents are mandatory to bereviewed and which are not. The various disclosure documents in the atleast one tokenized securities contract include mandatory andnon-mandatory documents. For example, but not for limitation, mandatorydocuments include Private Placement Memorandums (PPM) (includingbusiness plans, risks, and financial information), Contract ofSecurities Offering, Pricing Adjustments, and Purchase Agreements;non-mandatory documents include Company Bylaws, Contracts, LicensingAgreements, and Whitepapers. In one embodiment, mandatory documents arerequired to be downloaded. Mandatory documents include watermarks andother security features that the server computer of the tokenizedsecurities offering entity requires to be reported back via theblockchain platform for automatic confirmation that the mandatorydocuments have been downloaded, which is an automated indication thatthe mandatory documents have been reviewed by the registered user.Alternatively, an input from the registered user is received by theblockchain platform indicating that the mandatory documents have beenreviewed. In one embodiment, the disclosure documents are disclosed onlyto parties as desired by the offering entity or holding entity.

Documents reviewed by the registered user are hashed based on a securehash algorithm (e.g., SHA-3) and each hash is stored in the blockchain.Hashes of the reviewed documents uniquely represent what the documentsare. If a document is known, then the hash of it is known based on thesecure hashing algorithm used. In one embodiment, the server computer ofthe tokenized securities offering or holding entity is operable tocompare a hash representing a reviewed document by a registered user tothe hashes of the documents provided by the tokenized securitiesoffering entity to confirm that the registered user has reviewed themandatory documents.

Accept

User information is required for SEC compliance from the registered userand recorded on the blockchain platform. For individuals, requiredinformation includes legal name, address, and SSN. For entities,required information includes company name, address, and TID. Otherinformation for the registered user recorded on the blockchain include auniquely identified account on a blockchain platform (e.g., acryptocurrency account or a digital wallet address), automated clearinghouse account, bank account (e.g., source or receipt of paymentinformation), accreditation expiration date, and the hash of revieweddocuments.

After reviewing various documents in the at least one tokenizedsecurities contract, the user device transmits an acceptance messageregarding the terms and conditions in the tokenized securities offering.In one embodiment, the terms include not being a bad actor according tothe Office of Foreign Assets Control (OFAC), not violating thesecurities laws, not being a broker or dealer, not intending to purchaseto resell or any other broker or dealer activity, etc. The terms alsoinclude representations and warranties, private placement memorandum(PPM), anti-money laundering (AML), Know Your Customer (KYC). The AMLand KYC terms can also be verified via third-party reporting agenciessuch as banks, US Treasury, etc. via a software oracle.

Purchase

At purchase stage, a purchase order is completed by the registered userpaying a certain amount of cryptocurrency or fiat currency for at leastone security token specified in at least one tokenized securitiescontract. In one embodiment, the certain amount of currency istransferred from the unique identified account or digital wallet of theregistered user to an escrow account for the tokenized securitiesoffering entity on the blockchain platform. In one embodiment, theescrow account is a third-party escrow agency on the blockchainplatform. In another embodiment, the escrow account is a third-partyescrow agency in a banking system for fiat currency. In anotherembodiment, the tokenized securities contracts deployed on theblockchain platform provide an escrow function by holdingcryptocurrencies or banking system representations of fiat currency, andsecurity tokens until a predetermined threshold is reached. Thepredetermined threshold can be a date, a number of investors invested, aminimum raise, or other metrics determined by the tokenized securitiesoffering entity. After the predetermined threshold is reached, thecertain amount of cryptocurrency paid by the registered user is releasedto a cryptocurrency account or a digital wallet of the tokenizedsecurities offering entity, and the at least one security token isreleased to the cryptocurrency account or digital wallet of theregistered user corresponding to the at least one tokenized securitiescontract. Thus, the at least one tokenized securities contract is letand recorded on the blockchain platform. Once the at least one tokenizedsecurities contract is completed, it is immutable.

A purchase agreement is a binding contract between the tokenizedsecurities offering entity and investors. The purchase agreement defineswhat security is being acquired. During a purchase agreement process, aninvestor agrees to the terms and conditions in the purchase agreementand makes their representations (e.g., accredited investors, not a badactor, not a foreign asset holder in restricted countries, notperforming an illegal activity, etc.). A purchase order is the transferof funds in exchange of securities) (e.g., equity, debt, option). Duringa purchase order process, the tokenized securities offering entityverifies that the investor is not on a blacklist (e.g., competitor,affiliate), passes the OFAC check, and is an accredited investor andthat the seller is authorized to sell the security (e.g., not anexecutive, broker/dealer) by the offering or holding entity. How andwhen related information is gathered and processed vary in differentembodiments of the present invention.

Rights of the Tokenized Securities Offering Entity

In an Initial Public Offering (IPO), a red herring prospectus issued byan issuing company to potential investors contains informationassociated with the issuing company and their IPO. Information in thered herring prospectus is not complete and may be changed. Similarly,documents provided in the tokenized securities offering are changeableby the tokenized securities offering entity with SEC compliance duringthe tokenized securities offering. Once a document is updated, it is anew document and will have a new hash based on the secure hash algorithmused by the tokenized securities offering entity. If a document isupdated after reviewed by a registered user but before the purchaseprocess is completed, the server computer of the tokenized securitiesoffering entity redirects the registered user to go back to review theupdated document via the GUI in order to complete the purchase process.In one embodiment, the GUI is operable to read and interpret blockchainmessages. If a document is updated after a registered user completed apurchase order during the offering period, the server computer of thetokenized securities offering entity still provides the updated documentto the registered user and the registered user is enabled to select toreverse or keep the purchase order. Contracts of tokenized securitiespurchased at different times during the tokenized securities offeringmay be different due to document updates.

The server computer of the tokenized securities offering entity isoperable to change the registration process, change terms of offering,approve tokenized securities transferring, and make other updates inorder to comply with rules and regulations in a certain jurisdiction. Inone embodiment, systems and methods for offering and purchasingtokenized securities are compliant with the SEC. The server computer ofthe tokenized securities offering entity is operable to update theregistrations process, update offering terms, and approve security tokentransferring with SEC compliance.

The server computer of the tokenized securities offering entity hasenforcement mechanisms to execute against security tokens issued by thetokenized securities offering entity. In one embodiment, if thetokenized securities offering entity does not raise a predeterminedminimum amount of funds (e.g., cryptocurrency and/or fiat currency) ofliquid value, all the currency received from investors is reversed backto the investors. In one embodiment, if the tokenized securitiesoffering entity does not sell a predetermined number of tokens, all thecurrency received from investors is reversed back to the investors. Inone embodiment, after the tokens are sold, there is a uniform returnprice that is based upon a moving average of the value of Ethereum. Forexample, but not for limitation, if Ethereum is accepted by thetokenized securities offering entity, the moving average of the value ofthe Ethereum is a 90-day moving average. In one embodiment, if aninvestor does not comply with the terms and conditions as accepted bythe investor, the server computer of the tokenized securities offeringentity is operable to reject the noncompliant investor as a holder ofthe security tokens issued by the tokenized securities offering entityby reversing the transactions with invested users and/or seizing thesecurity tokens purchased by noncompliant investors on the blockchainplatform.

The enforcement mechanisms apply to accredited investors throughout anentire trading cycle. In one embodiment, if an investor has lost theaccreditation status since renewal is required after a certain period oftime, the server computer of the tokenized securities offering entity isoperable to request the disaccredited investor to sell the securitytokens. In one embodiment, the security tokens are sold by thedisaccredited investor. In another embodiment, the server computer ofthe tokenized securities offering entity is operable to sell thesecurity tokens on behalf of the discredited investor on the blockchainplatform. Optionally, the discredited investor can still retain thesecurity tokens with regulatory compliance. Section 12(g) of theExchange Act requires an issuer with total assets of more than $10million and a class of securities held of record by either 2,000persons, or 500 persons who are not accredited investors, to registerthat class of securities with the Commission. However, securities issuedpursuant to Regulation Crowdfunding are conditionally exempted from therecord holder count under Section 12(g) if the following conditions aremet: (1) the issuer is current in its ongoing annual reports requiredpursuant to Regulation Crowdfunding; (2) has total assets as of the endof its last fiscal year of $25 million or less; and (3) has engaged theservices of a transfer agent registered with the SEC.

In one embodiment, the systems and methods of the present invention donot allow for buying and selling security tokens at the same time orwithin a specified time period. The amount of security tokens aregistered user is planning to purchase is held in escrow on theblockchain while the registered user is in the process of purchasing,and the security tokens held in escrow cannot be sold by the tokenizedsecurities offering entity to prevent double-spending. Additionally,once a purchase is completed there are rules to be enforced such thatthe purchaser cannot resell the security tokens for some period of timeto comply with SEC rules for ‘making a market’ (i.e., a rest period).

Token Market for Token Transfer

In one embodiment, the tokenized securities offering entity provides atoken market with a token transfer framework facilitating tokenexchanges after an offering period. In one embodiment, restrictions areintroduced to prevent the tokenized securities offering entityfunctioning as a token marketplace during the offering period. Forexample, asks and bids are not allowed to be posted on a bulletin board,and the web site of the tokenized securities offering entity is notallowed to post the security token prices. However, bids are operable tobe made to security token holders on the blockchain platform. Forexample, a bid for 5 security tokens is made, a bidding message is sentto security token holders, the security token holders review the biddingmessage and the bid via their digital wallets and make counter offers ordirect sales (e.g., swap tokens by fulfilling contract). This processcreates visibility for SEC compliance. Tokenized securities purchasedduring the tokenized securities offering (or through existing manualmeans) are tradable on a secondary market usually after a rest period.

When the tokenized securities offering entity solicits to buy and sell,the entity creates a token market itself for token transfer or tokenexchange as the tokenizing securities offering entity will function asboth a token holder and a token transactor. However, under current SECrules at the time of the present invention, no solicitation is allowedoutside allowed investors for SEC, State, and offering entity'scompliance; as SEC provides for expansion, modification, or new rules,the platform of the present invention is intended to correspondinglyprovide for the same. In one embodiment, the tokenized securitiesoffering entity also calculates taxes due to revenue department based oninformation including gross amounts of security tokens and storedinformation of capital gains and losses by token holders. Theinformation is transmitted to an IRS network, which receives theinformation and collects taxes from security token holders.

The tokenized securities offering entity keeps a log of events impactingcontracts. The token transfer framework is piggybacked on loggingmethods used by the tokenized securities offering entity. Notificationsof what is available on the token market of the tokenized securitiesoffering entity are created based on the logging methods and sent to alltoken holders. The notifications are not sent outside of the whitelistof allowed investors so that the notifications are not generalsolicitation but rather managed by the offering entity.

Books, records, contracts, and financials of the tokenized securitiesoffering entity are accessible to invested investors for inspection.When new blockchain securities are created, the invested investorsreceive messages for inspection. Every invested investor has uniquedocuments with personalized watermarks. Preferably, a web-based portalis provided, the portal having a GUI for at least one investor to manageits activity and initiate new activity within the blockchain-basedplatform. Contrary to a whitelist, the tokenized securities offeringentity also creates and automatically maintains a blacklist that blocksdomain names, individuals, competitors and others with malicious intentfrom the token purchase or exchange.

BITE Tokens

In one embodiment, tokenized securities offered by the tokenizedsecurities offering entity are named as Blockchain Instrument forTransferrable Equity (BITE) tokens. BITE tokens can represent variousforms of securities used by entities, such as common stock, preferredstock, options, warrants, convertible notes, restricted stock units andemployee stock options. For example, the BITE tokens have, but is notlimited to the following features:

(a) Individual Optional Conversion: At any time on or after the end of apurchase period, qualified holders are enabled to elect to convert theirBITE tokens into shares of voting or non-voting stock. Initially eachBITE token is convertible into one share of voting or non-voting commonstock. In a preferred embodiment, the conversion is subject to laterproportional increase or decrease to reflect any changes to the numberof outstanding shares of common stock of the offering entityattributable to any stock dividend, split, reverse splitrecapitalization or similar event.

(b) Dividend and Distribution Equivalent Rights: qualified holders willreceive payments equal to the dividends and other distributions that arepaid to holders of any class of common stock on an as-converted basis.

(c) Majority Approved Financing: all outstanding BITE tokens willautomatically convert into a new class of securities issued by the BITEoffering entity in the event of (1) the BITE offering entity offers suchconversion option to the holders of BITE tokens and (2) such conversionis approved by a majority of qualified holders. The majority ofqualified holders are the qualified holders who own a majority of thethen outstanding BITE Tokens held by all qualified holders.

(d) Liquidity Event Option: each qualified holder has the right tochoose to receive other cash or non-voting common stock when a liquidityevent (e.g., IPO or Change of Control) or dissolution occurs. If theliquidity event is an IPO, holders of BITE tokens will receive votingcommon stock instead of non-voting common stock.

(e) Automatic Conversion Upon a Qualified Equity Financing: If aqualified equity financing occurs, all outstanding BITE tokens willautomatically convert into the same class of securities issued in thequalified equity financing, subject to holders executing qualifiedequity financing documents.

In one embodiment, the systems and methods are designed to comply withthe regulation environment in the US. In other embodiments, the systemsand methods can be used for unregulated environments or differentregulation environments in other jurisdictions.

FIG. 1 illustrates a system for purchasing security tokens according toone embodiment of the present invention. The system includes at leastthe following components: a user device for at least one investor,server computers of qualifying agencies and their supporting agencies, aserver computer of the BITE token offering entity, and a blockchainplatform hosting BITE token contracts in network communication, whereinthe components are operatively communicative over at least one network.A web-based portal having an interactive GUI is provided forfacilitating interaction via the user device and/or server computer(s).

The user device for an investor sends an accreditation request messageto a server computer of a qualifying agency via a GUI. The servercomputer of the qualifying agency issues an accreditation certificatebased on information provided by the investor via the user device andinformation regarding the investor from supported agencies. The userdevice provides the accreditation certificate Identification (ID) andthe qualifying agency name when registering with the server computer ofthe BITE token offering entity besides other required informationincluding but not limited to legal name, address of residence, ande-mail address. In one embodiment, self-accreditation of the at leastone investor is provided via the platform, based upon inputs receivedfrom the user device. The server computer of the BITE token offeringentity is operable to access and synchronize with the accreditationinformation from different qualifying agencies via API and referral, andautomatically create an up-to-date whitelist of accredited investorsbased on the accreditation information from different qualifyingagencies. The whitelist of accredited investors includes legal names,addresses of residence, cryptocurrency accounts and/or wallet IDs,accreditation expiration dates and other essential information of theaccredited investors. In one embodiment, non-accredited investors areenabled to participate under crowd-sourcing, or other alternatives asprovided for based upon rules of the SEC or governing body. The servercomputer of the BITE token offering entity is operable to verify theaccreditation certificate obtained by the investor by looking up in thewhitelist of the accredited investors. In one embodiment, the whitelistis recorded and updated on the blockchain platform hosting BITE tokencontracts. In one embodiment, the tokenized securities offering entityalso creates and maintains a blacklist and blocks domain names,individuals, competitors and others with malicious intent from the tokenpurchase or exchange. In one embodiment, the blacklist is also recordedand updated on the blockchain platform hosting BITE token contracts. Theuser device for the investor is operable to send an “agree-to-terms”message if the investor intends to participate in the BITE tokenoffering. Then the user device receives and reviews documents related tothe BITE token contract deployed on the blockchain. The user devicemakes the purchase of the at least one BITE token contract on theblockchain platform by transmitting a required amount of currency.

In one embodiment, the terms in the BITE token offering include amaximum number of token holders, a minimum amount of investment, anumber of days to rest, and a restocking fee. In one embodiment, themaximum number of token holders complies with SEC rules, for example,the maximum number of token holders is set at 1500. For example, theminimum amount of investment is an amount of cryptocurrency of $5000equivalent value, or other value based upon another cryptocurrency oranother currency. The number of days to rest defines a time periodduring which BITE tokens are not allowed to be resold for inside tradingrestriction. In one embodiment, the number of days to rest is 60. Inanother embodiment, the number of days to rest is not bounded by a date,but rather until all of the tokens have been sold. The number of days torest ensures that the security tokens are not resold after beingpurchased during the BITE token offering, unless allowed by thegoverning entity or rules body. The restocking fee is a percentage ofthe prices of BITE tokens being returned from an investor during acertain period of time due to various reasons with SEC compliance. Forexample, while the BITE token offering is open, an investor problem isidentified after investment, the server computer of the BITE tokenoffering entity is operable to reverse the BITE tokens held by theproblem investor back to the BITE token offering entity, and the BITEtokens are reintroduced to the market. The server computer of the BITEtoken offering entity is operable to charge the problem investor forrestocking the security tokens into the market. In one embodiment, BITEtokens are returned from an investor up to 5 days before the BITE tokenoffering is closed, and a 15% restocking fee is charged.

In one exemplary embodiment, the BITE token offering entity initiallyoffers a predetermined number of tokenized securities, for example, 3000tokenized securities, the maximum number of BITE token holders is 1000,the minimum investment of each investor is $5000 equivalent Ethers, andthe total investment is $15,000,000 equivalent Ethers.

FIG. 2 is a timeline throughout a life cycle of BITE tokens according toone embodiment of the present invention. The timeline starts withdeploying BITE token contracts on a blockchain platform. There are fourperiods: presale period, offering period, rest period, and tradingperiod. Dates for those periods are programmable based upon how theywork together in the BITE token contracts. Variables regarding the BITEtoken offering are programmable on the blockchain platform. For example,the variables include start and stop dates for each period, presaleprices, offering prices, minimum investment amount, and thresholds whichtrigger the next period. A threshold can be a date, a number of tokenspurchased, or a number of investors invested.

The first period is a presale period. During the presale period,potential investors are enabled to register and review documents relatedto the BITE token offering, and a discount is offered for purchasingBITE tokens. An initial price for tokenized securities is set by theBITE token offering entity, and the discount is based on settings ofprice adjustment and adjustment frequency in the BITE token contractsdeployed on the blockchain platform. In one embodiment, an initial priceis set as 17 Ethers per BITE token, price adjustment is set at 1 Ether,and there are 4 adjustments during a four-week presale period. Inanother embodiment, accredited investors receive at least one discountrate based upon an initial price with at least one time factor; by wayof example and not limitation, accredited investors automaticallyreceive 15% off of the initial price during the first week of presale,10% off during the second week of presale, 5% off during the third weekof presale, and no discount during the fourth week.

The second period is an offering period. During the offering period,accredited investors are enabled to register for participation, reviewdocuments, accept terms, and purchase BITE tokens. BITE token contractsare let to invested investors and recorded on the blockchain platform.During the offering period, some investors may be rejected due to failedaccreditation, being a competitor of the BITE token offering entity, orbeing affiliated with a competitor of the BITE token offering entity.Rejected investors are allowed to petition and demonstrate to the servercomputer of the BITE token offering entity that they are valid investorsto the BITE token offering entity. The server computer of the BITE tokenoffering entity is operable to verify and reinstate the rejectedinvestors, and authorize them to participate in the BITE token offering.

After the offering period, there is a rest period. The rest period is toensure that investors participated in the BITE token offering are notbrokers or dealers as defined by the SEC rule 144, or other rules orregulations by the SEC or other governing authority.

After the rest period, it is a trading period, during which BITE tokensare tradable on a secondary market. This period may or may not bebounded by a time requirement. The server computer of the BITE tokenoffering entity is still operable to enforce SEC rules for compliance onthe blockchain platform. For example, the server computer of the BITEtoken offering entity is operable to suspend certain investors ortrading activities for a certain time period.

In one embodiment, the BITE token offering entity is operable to tradeBITE tokens as an exchange automatically based on terms in the BITEtoken contracts. In one embodiment, asks and bids are performed inorder. There is only one bid or one ask per allowed investor at anygiven time such that they cannot sell tokenized securities that they nolonger own, or attempt to purchase tokenized securities when they do nothave available funds.

Once the BITE token contract is let, it is not changeable. However,terms within the contract that are executable are changeable, forexample, parameters within the contract (e.g., suspension of trading orinvestor).

FIG. 3 illustrates interactions between different entities during asecurity token offering according to one embodiment of the presentinvention. A server computer of the security token offering entitydeploys security token contracts and raise Ethers on Ethereumblockchain. The server computer of the security token offering entitysends a request message to a server computer of crowdsourcing investorbulletin (IB) indicating that the token offering entity wants investmentand access to investor information. The server computer of thecrowdsourcing IB sends a reply message allowing or disallowing the tokenoffering entity to access to the investor information. A user device foran investor who intends to participate in the security token offeringrequests qualification from the crowdsourcing IB via a GUI. If therequesting investor is qualified as an approved (for example, if theinvestor's income must be verified) or accredited investor, the servercomputer of the crowdsourcing IB sends a qualification certificate tothe user device for the investor. A blockchain oracle is utilized by theserver computer of the token offering entity to look up investorqualification information from the crowdsourcing IB to verify investoraccreditation status. Once the investor accreditation status isverified, the user device is operable to review and accept the securitytoken contract, and send Ethers from an Ethereum account to finishpurchasing security tokens on the Ethereum blockchain.

FIG. 4 illustrates a token purchasing process on blockchain during asecurity token offering according to one embodiment of the presentinvention. A user device for an investor communicates with a servercomputer of an accreditation service to get the investor approved as anaccredited investor to participate in the security token offering. Theuser device includes an Ethereum wallet of the investor. The Ethereumwallet includes a unique identifier from which Ethers are sent for tokenpurchasing on the Ethereum blockchain. The user device transmitsinvestor information to the server computer of the security tokenoffering website, with the investor information including an emailaddress, a uniquely identified account, an encrypted code foraccreditation status, and a third-party verifying agency who issued theencrypted code for accreditation status to the server computer of thesecurity token offering website. The server computer of the securitytoken offering website registers the accredited investor on the Ethereumblockchain with the information received from the user device. The userdevice receives documents included in a token contract after registeringthe investor with the sever computer of the security token offeringwebsite. For example, but not for limitation, the documents include PPM,subscription agreement, Intellectual Property, and Article(s) ofIncorporation. The user device transmits an acceptance message afterreviewing documents included in a security token contract and sendsEthers to purchase security token contract on the blockchain.

FIG. 5 is a timeline throughout a life cycle of tokenized securitiesaccording to one embodiment of the present invention, wherein the lifecycle includes at least one time interval. By way of illustration, thereis a promotion period before the tokenized securities offering. Theplatform of the present invention is operable to receive applications byat least one intended investor for accreditation, in order toparticipate in the tokenized securities offering during the promotionperiod. During the offering period, the platform is operable to providefor the purchase of tokens on a blockchain platform by accreditedinvestors. In one exemplary embodiment of a time interval, the offeringperiod of the tokens lasts 30 days, with a rest period following theoffering period that lasts 90 days.

A verification process is required in an electronic system for atokenized securities offering to demonstrate that a potential investoris an accredited investor according to SEC rules. After a rest period,existing shareholders are enabled to sell to new investors who are notrequired to demonstrate an accredited investor status. In oneembodiment, the systems and methods of the present invention allowself-verification by new investors (e.g., by checking a box “I'm anaccredited investor based on income or assets . . . ” and providequalification documents), and the tokenized securities offering entityperforms qualification assessment (QA) manually or automatically duringthe offering period and rest period instead of using a third-partyservice for verification. After the rest period, there is a resaleperiod when tokens are traded between existing tokenized securitiesholders and new investors or other existing holders.

FIG. 6 shows an exemplary illustration for transactions and contractsrecorded in blocks on the Ethereum blockchain, although the presentinvention is operable for at least one blockchain, including otherblockchain platforms. Continuing with the example of FIG. 6, theEthereum blockchain, every block includes a multiplicity of transactionsand a hash linked to a preceding block. Each transaction includes anaccount identifier, an ether balance, a transaction date, and data. Inone embodiment, the data in each transaction includes security tokencontracts deployed by the systems and methods of the present invention.Each tokenized securities contract includes a contract ID, an Etheraccount, a balance of tokens in an escrow account for the tokenizedsecurities offering entity on the blockchain, and a state of the tokenholder. The state of the token holder is based on the whitelist when thetoken contract is let. In one embodiment, each tokenized securitiescontract also include data and manipulation methods.

FIG. 7 illustrates transactions for a token contract between an investorand a security token offering entity on the Ethereum blockchain. In oneembodiment, a token contract is 20 Ethers at a time during a tokenoffering. When token contracts offered by the token offering entity aredeployed on the Ethereum blockchain, there are 3000 contracts available,and one of the at least one investor is identified as cd136248562, whichhas 300 Ethers in his digital wallet, which are both recorded in oneblock on the Ethereum blockchain. Investor cd136248562 registers withthe token offering entity for token purchase, one token contract is letto the investor, and the transaction is recorded in one block on theEthereum blockchain. The transaction includes a balance of investorcd136248562 as 280 Ethers, and the token contract. The token contractincludes the balance of tokens in an escrow account for the tokenoffering entity on the Ethereum blockchain.

FIG. 8 lists investor documents in a token purchase process according toone embodiment of the present invention. When a user device registers aninvestor on the server of the tokenized securities offering entity website, the user device needs to send an acceptance message regarding anon-disclosure agreement and provide an e-mail address of the investorto the server of the tokenized securities offering entity. In order toproceed in the purchase process, the user device needs to provideinformation including a unique qualification ID for investoraccreditation and its issuing agency to the server of the tokenizedsecurities offering entity web site. Meanwhile, the server of thetokenized securities offering agency provides investor documentsavailable for download on a blockchain platform. After downloading theinvestor documents, the user device of the investor sends an agreeingmessage regarding the terms and conditions specified in an PPM and asubscription agreement, and provides a unique identifier address to makethe purchase. Investor documents include PPM, subscription agreement,and inventor qualification documents. The PPM specifies risks, companycharter, business plan, etc. The PPM is not required for investorsignature. The subscription agreement includes introduction of thetokenized securities contracts offered by the tokenized securitiesoffering entity and stock definition. The subscription agreement isrequired for investor signature. The investor qualification documentsprovide proof of the investor's net income or annual income withinvestor signature for self-verification. In one embodiment, the servercomputer of the tokenized securities offering entity sends a messageasking for an accreditation status of new investors participating in thetokenized securities offering. The new investors are enabled forself-verification by submitting qualification documents instead goingthrough a third-party accreditation agency. In one embodiment, existingshareholders are required to confirm their accredited investor status onan annual basis. The server computer of the tokenized securitiesoffering entity sends a message asking for renewed accreditation statusof the existing shareholders. The existing shareholders are enabled forself-verification by submitting qualification documents instead goingthrough a third-party accreditation agency.

FIG. 9 illustrates a tokenized securities offering timeline according toone embodiment of the present invention, showing exemplary timelines ofpromotion through offering and rest periods. Alternative timelines orintervals are provided in other embodiments. Social media outreach,press releases, and other marketing tools are utilized to raiseawareness for the tokenized securities offering on the platform, and itlasts 4 weeks before a promotion starts. The promotion lasts 2 weeks,during which the tokenized securities offering website is live forpromotion. Then token contracts are deployed on a blockchain platformand the price is set for the token contract. There is a 2-week presaleperiod before a 2-week official tokenized securities offering. After theofficial offering, there is a rest period before the token contracts canbe traded. In this embodiment, the rest period is 1 year. After a restperiod, trading begins for buying and selling the token contracts. Inone embodiment, the present invention provides an algorithm for pricesetting. Various variables are programmed in the token contracts on theblockchain platform. For example, the price is set at lowest at thebeginning of the offering, but a minimum amount of purchase is required.Because of the volatility of cryptocurrencies and other currencies, thepresent invention provides an automated mechanism to dynamically set theprice of token contracts based on the cryptocurrency price, by way ofexample and not limitation, the Ether price, when the contract is aboutto let. The token contract price is locked in at the time of purchasingand not changeable afterwards even though Ether price changes.

FIG. 10 is a flowchart of a token purchase process according to oneembodiment of the present invention. A server computer of a tokenizedsecurities offering entity provides a tokenized securities offeringlanding page, which includes promotion materials, offer status, and awork flow of token purchase. A user device for an investor transmitsrequired investor information to the server computer of the tokenizedsecurities offering entity and accepts terms of the offering website(e.g., non-disclosure and privacy). In one embodiment, the registrationprocess includes 2-step authentication or other authentication protocolsto effect security. In another embodiment, the registration is enabledwith Open ID protocol. The user device is enabled to use a third-partylogin of the investor, and the third-party login preferably has 2-stepauthentication as well.

If the user device provides a qualification ID of the investor'saccreditation status to the server computer of the tokenized securitiesoffering agency, the server computer of the tokenized securitiesoffering agency is operable to verify the investor's accreditationstatus by comparing information related to the investor to a whitelistand a blacklist the server computer of the offering entity maintains upto date. If the investor does not have a qualification ID whenregistering, the user device is redirected to a third-party website foraccreditation, or self-accreditation. If the user obtains aqualification ID from the third-party website for accreditation, theoffering website is able to verify his or her accreditation status basedon the up to date whitelist and blacklist maintained by the offering.The whitelist includes information related to accredited investors,wherein the information includes but is not limited to investor names,addresses, at least one qualification ID and corresponding issuingagency. The blacklist includes affiliations, competitors and USaddresses, other addresses the offering entity wants to block,predetermined foreign investors, and/or bad actors based on dataobtained from OFAC and/or other databases.

Once the server computer of the offering entity verifies the investor asan accredited investor, the user device of the investor receives a linkto documents included in a token contract for reviewing and accepting.The user device transmits a Wallet ID which is a uniquely identifiedaccount and a full signature and accepts token offering terms, SECrules, and non-disclosure agreements (NDA) after reviewing thedocuments. The user device then makes transactions for purchasing thetoken contract by transmitting a certain amount of cryptocurrency fromthe investor's digital wallet to an escrow account for the tokenoffering entity on a blockchain platform.

The process of purchasing tokenized securities contracts is executedautomatically based on the contract deployment on the blockchainplatform. In one embodiment, manual verification is needed for blockingcompetitors and other rule-complying purposes.

In one embodiment, the present invention provides systems and methodsfor implementing tokenized securities on a blockchain based on ERC20token standard (or similar subsequent standard). The present inventionrequires at least one uniquely identified account on the blockchainplatform for an investor to participate in the tokenized securitiesoffering. Cryptocurrencies accepted by the offering entity are selectedfrom the group consisting of Bitcoin, Ethereum, Litecoin, and othercryptocurrencies of liquid value. Credit card, debit card, cash, orother traditional payment methods are not accepted during acryptocurrency only offering. In one embodiment, the offering entitycomputer is in network communication with certain cryptocurrencyexchanges or traditional banking system to facilitate token purchasesvia fiat currencies. In one embodiment, a centralized wallet and trusteeis utilized as a special purpose vehicle to facilitate investors who donot have accepted cryptocurrencies, or uniquely identified accounts onthe blockchain-based security token platform required to purchasetokenized securities during an offering as a single person entity.Investors who do not have accepted cryptocurrencies or uniquelyidentified accounts pay the centralized wallet and trustee by fiatcurrencies or other payment methods accepted by the centralized walletand trustee via an off-chain transaction.

In one embodiment, security tokens are tokenized securities. In oneembodiment, security tokens represent tokenized securities. In oneembodiment of the present invention, tokenized securities contracts orsecurity token contracts represent securities. In one embodiment, thetokenized securities contracts are transformed into other formats duringtheir life cycles after the tokenized securities offering is closed. Inanother embodiment, tokenized securities contracts can have childrencontracts. Children contracts are those that can manipulate or otherwisemanage the tokenized securities created by the parent contract. Aninitial tokenized securities offering entity is operable to launchsecondary tokenized securities offerings.

Contracts

A standard smart contract in any blockchain contains informationincluding a contract owner, a contract address, contract data, and terms(e.g., rules and methods to act on the contract).

With ordinary blockchain smart contracts, the contract owner remains thesame for the entirety of the contract lifecycle (i.e., from deploymentuntil termination conditions). In contrast, the tokenized securitiescontracts in the present invention are transferrable. Every contract hasa unique identifier. In one embodiment, the unique identifier is a hashvalue generated by a hash algorithm in the blockchain. In oneembodiment, the unique identifier is generated by other mathematicalalgorithm (e.g., mathematical formulation of quantum mechanics).

In one embodiment, the blockchain-based security token platform of thepresent invention provides a proxy contract between party A and party B.FIG. 11 illustrates a proxy contract according to one embodiment of thepresent invention. Party A participates on the tokenized securitiesoffering blockchain directly as the proxy owner. In one embodiment,party A is the platform owner who offers and/or trades tokenizedsecurities as a proxy of party B. In one embodiment, party A is abroker/dealer offering and/or trading tokenized securities on theblockchain-based security token platform. Party B can be any company orentity intending to offer and/or trade tokenized securities on theblockchain-based security token platform via a proxy. A proxy contractincludes a unique contract address, a unique address of the proxy owner,a unique address of the company X, contract data which is being proxied,and terms to act on the proxy contract. Terms of the proxy contractinclude a time the proxy contract is signed, renewals, terminations, andmethods to act on the contract data. The methods to act on the contractdata includes but not limited to changing ownership from the contractoriginating party to another party (e.g., company X) by changing theproxy owner unique identifier to company X. With the proxy contract,party A can represent party B for participating on the blockchain-basedsecurity token platform. The proxy contract allows for ownership to beexchanged on specific contract terms being met or contract completion(all the terms are met). The proxy contract provides the means to passownership of a contract from one party to another. In anotherembodiment, proxy contracts are used to form a multi-party transactionwhere the ownership of the contract is transferred to another party thatrepresents a group of new owners that have been aggregated.

With ordinary blockchain smart contracts, the data in the contract isvisible to every node in the network, but only the contract owner canmanipulate the data. In one embodiment, the blockchain-based securitytoken platform of the present invention provides an escrow contractbetween party A (proxy owner) and party B (company X). An escrowcontract encrypts the ‘important data’ using the owner's uniqueidentifier address so that only the owner of the contract can use itsprivate key and/or password to view the ‘important’ data. An escrowcontract typically inherits the functionality of a proxy contract toenable the ownership of the escrow contract to change when terms of theescrow agreement between the parties have been met. An escrow contractholds onto valuable information (e.g., a digital key to a lockbox,account identifier, disclosure information). The owner of the escrowcontract has access to the escrowed information. In one embodiment, aproxy contract is used in conjunction with an escrow contract (or othertypes of contracts identified below) to allow the escrowed informationto be transferred from one party to another. For example, a proxycontract is made between two parties that are settling a BITEtransaction outside of the blockchain, and the escrow contract isholding the bank account information from the buyer and is owned by theseller. Once the proxy contract changes ownership (e.g., because ofrelease of information by the bank that funds are available as capturedby a software oracle), the data is decrypted by the original owner andre-encrypted using the new owner's uniquely identified account whichmake the escrowed information visible to the new owner (buyer) when theyuse their key and/or password to access the escrowed information. FIG.12 illustrates an escrow contract according to one embodiment of thepresent invention. The escrow contract ensures data security. In oneembodiment, the escrow contract is used for off-chain transactions. Forexample, automated clearing house (ACH) transaction data can be held atthe escrow contract with encryption and accessible only by an owner'sdecryption key and/or password.

In one embodiment, the blockchain-based security token platform of thepresent invention provides an aggregate contract. FIG. 13 illustrates anaggregate contract according to one embodiment of the present invention.The aggregate contract is between a party A and a multiplicity ofparties including investors and parties included in proxy contracts,escrow contracts, and any other contracts. The aggregate contractcreates a group to act as a single entity represented by party A. Theaggregate contract includes a list of uniquely identified accountspointing to different individuals, aggregate contracts, or othercontracts, and allows the multiplicity of parities and party A to havetransactions in addition to the transactions that party A participateson behalf of the multiplicity of parties. For example, a group oftokenized security holders could form an aggregate contract wherebyParty A is a legal entity (such as an LLC), that can be used to sell theentirety of the group's tokenized securities for a single price toanother party in a proxy contract. Once that transaction is complete,the aggregate contract between the multiplicity of parties and party Aautomatically exchanges the funds in the correct amounts from party A toeach member of the group based on the tokenized securities theycontributed to the aggregation, less any transaction fees, etc.

In one embodiment, an aggregate contract is operable to represent amultiplicity of levels of contracts, including but not limited to nestedlevels of aggregate contracts. An aggregate contract is operable to holdor retain a unique identifier to another aggregate contract, which inturn retains a unique identifier to another aggregate contract, and soon. An aggregate contract is further operable to represent an investor,who is actually an entity (i.e., private equity fund), which has manyinvestors, of which one of those investors could represent anotherentity (i.e., trust fund), which is made up of several parties.

In one embodiment, a typical contract structure on the blockchain-basedsecurity token platform of the present invention is in the format of aproxy contract representing tradable securities. FIG. 14 illustrates atypical contract according to one embodiment of the present invention.In one embodiment, the typical contract is a tradable security (i.e.,BITE) which inherits transfer ownership capabilities from a proxycontract. Tradable securities contain unique identifiers representingdifferent contracts and libraries, including aggregate contracts, proxycontracts, and etc. In one embodiment, a tradeable security represents acommon stock, which has an aggregate of investors. In one embodiment,some of the investors are nested levels of aggregates of investors(i.e., fund, legal entity), and other investors are represented bydealers or brokers in a proxy contract. Additionally, there is one ormore libraries assisting the performance of data type checks, datastorage, provide notification of events happening within the contracts,etc. The tradeable security has rules which govern allowed parties inthe sale (e.g., whitelist and blacklist), timing of sales (e.g., restperiods), disclosure restrictions (i.e., who can view the documents andwhether they are mandatory or not), allowed price boundaries (e.g.,holding company allows sales over a predetermined price), transactionfees (e.g., platform, broker, dealer, discounts), and contract controls(e.g., start, suspend, resume, terminate).

In one embodiment, the blockchain-based security token platform of thepresent invention is operable to link contracts with the same owner byusing one single proxy address, which can access to contract data andterms in the linked contracts. Linking contracts in this way allowsdeployment of different contracts at different times to work together ona single transaction. This capability essentially allows for rules to beadded to a transaction after initial deployment without modification tothe original contract.

In one embodiment, the blockchain-based security token platform of thepresent invention is also operable to suspend a contract. Suspending acontract disables the ability for a contract to be executed. In oneembodiment, it enables an offering entity to halt the purchase of newtokenized securities because there has been a significant event ormaterial change to the offering entity. In another embodiment, itenables a holding entity to suspend a proxy contract because the holdingentity finds out that a broker or dealer is representing a competitor.Suspended contracts can be resumed (allowed to continue execution) orterminated (no longer able to execute). In yet another embodiment, itenables the SEC to halt a tokenized securities trading underinvestigation.

In one embodiment, the blockchain-based security token platform of thepresent invention also provides a voting contract between an entity andits shareholders/investors for proxy voting. In one embodiment, thevoting contract inherits an aggregate contract. The voting contractincludes a list of questions for shareholders/investors. The entitydeploys voting contracts on the blockchain-based security tokenplatform. Each investor who holds at least one tokenized security fromthe entity receives a voting contract with a unique address. Once theinvestor submits the answers to the list of questions in the votingcontract, the voting contract is collected, processed, counted, andrecorded on the blockchain. In one embodiment, the shareholders areaggregated, and the present invention provides for each of the nestedvotes to be counted with rules applied to determine whether a simplemajority, super majority, or some other calculation is required toprovide the vote for the represented party. In cases of proxy contracts,the rules in the proxy contracts govern whether the current owner of theproxy contract votes or whether the proxied party votes.

The blockchain-based security token platform of the present inventionallows for peer-to-peering trading of tokenized securities, enablesprivate equities transferrable, increases liquidity of private equities,automates regulatory compliance, enforces an entity's desire for limiteddisclosure, and reduces risk of non-compliance. In addition, proxyvoting and self-accreditation enabled by the blockchain-based securitytoken platform also facilitates engagement of peer shareholders amongdifferent issues.

In one embodiment, all tokenized securities contracts fulfill all therules constructed by or established by the SEC for registrationexemptions, for example, including but not limited to Section 4(a)(2),Regulation D, Regulation Crowdfunding, Regulation A, Intrastate, and anysubsequent rules created by the SEC.

In one embodiment, the tokenized securities contracts fulfill all staterules for compliance. For example, under Regulation D rule 506(c), acompany raising private money preempts a state registration, but forRegulation D rule 504, the contract would also have to ensure thecompany has registered with the state.

In one embodiment, the tokenized securities contracts fulfil anyarbitrary company rule. For example, it is required that arepresentative of a company approves an equity sale before payment andownership of a tokenized securities contract can be exchanged.

In one embodiment, the tokenized securities contracts are grouped bycertain rules applied to the tokenized securities contracts. Forexample, a company has several classes of securities (e.g., Series A,Series B, etc.) in the company's entire list of equities. A rule for aprivate company is that the maximum number of shareholders for allsecurities must be less than 2000. When offering tokenized securitiescontracts, the company groups the tokenized securities contracts basedon the rule mentioned above.

In one embodiment, the tokenized securities contracts are linked bycommon ownership hashes and keys, which are operable to manage thecontracts through their entire lifecycle including deployment, usage,and retirement. Thus, tokenized securities contracts deployed atdifferent times are operable and can participate together in onetransaction.

In one embodiment, the tokenized securities payments are made outside ofthe blockchain-based security token platform of the present invention.For example, an ACH payment can be executed outside of theblockchain-based security token platform and verified by the tokenizedsecurities contract, and then the tokenized securities is transferred.

In one embodiment, the blockchain-based security token platform of thepresent invention comprises a blockchain recording security tokentransactions from the first block (the genesis block) until the currentblock. In one embodiment, the blockchain is designed to retire as of acertain block such that nodes are synchronized without holding all thedata from the retired part. In other words, a blockchain can be retiredat a prescribed interval (e.g., block No. 10,000) and any new nodesadded to the blockchain can start at the next node (e.g., block No.10,001 with block No. 10,000 as the genesis block). Since a blockchainis immutable, there is no need to keep previous blocks active andsynchronized on all nodes. This solves the problem of data growth on allthe nodes.

In one embodiment, a company solicits investor, owners, and/or familymembers to approve certain actions of the executive team. Solicitationsand responses thereto are recorded on the blockchain-based securitytoken platform of the present invention to provide specificity to boardmeeting minutes and other communications.

In one embodiment, the blockchain-based security token platform isoperable to create tokenized securities representing securities topreviously offered to pre-existing shareholders. All the capabilitiesdescribed for an initial offer apply, including, but not limited to,whitelist, blacklist, register, accepting terms, purchase agreement,purchasing, reselling. In one embodiment, BITE tokens can be offeredand/or assigned to pre-existing shareholders and/or new shareholders.

In one embodiment, the present invention enables existingshareholders/proxies to update their accreditation statuses on aperiodic basis. For example, SEC Act of 1934, Section 12(g) requires acompany with more than $10 million in assets desiring to remain privateis limited to 2,000 investors, of which only 500 can be non-accredited.Thus, for a company to remain private it must track how many of itsinvestors are accredited on an annual basis.

In one embodiment, the present invention provides federated purchases oftokenized securities. For example, a BITE token represents securitiesfrom two companies, BITE owners are enabled to exchange ownership in alike-kind exchange (e.g., no payment is made).

In one embodiment, the present invention provides aggregated purchasesof tokenized securities on the blockchain-based security token platform.For example, a purchaser of BITE tokens is enabled to purchase BITEtokens from two different owners with a single payment. For example,owner A has 200 BITE tokens for $550, and owner B has 300 BITE tokensfor $800, a purchaser can buy both sets of BITE tokens in a singletransaction for $1,350.

In one embodiment, the present invention provides aggregated sales oftokenized securities on the blockchain-based security token platform.For example, two sellers are enabled to offer their BITE tokens togetherwith the same unit price.

FIG. 15 is a diagram illustrating a signup process for offeringtokenized securities on a blockchain platform according to oneembodiment of the present invention. A tokenized securities offeringentity (e.g., a broker or a company) registers on the blockchain-basedsecurity token platform. The blockchain-based security token platformthen creates a proxy contract with the broker or company for a tokenizedsecurities offering. The tokenized securities offering entity thencreates tokenized securities on the blockchain-based security tokenplatform, which deploys tokenized securities contracts for the tokenizedsecurities offering entity. The tokenized securities offering entitythen adds its investors and/or owners to the blockchain-based securitytoken platform, which requests a capitalization table for verificationfrom the investors and/or owners. Interested investors can register onthe blockchain-based security token platform for participating in thetokenized securities offering. The blockchain-based security tokenplatform then requests an up-to-date accreditation status from theregistered investors. The registered investors respond by answeringquestions that demonstrate their accreditation status. In oneembodiment, the blockchain-based security token platform creates awhitelist of accredited investors based on data extracted from multipleinvestor accreditation related databases.

FIG. 16 is a diagram illustrating a trading process for a tokenizedsecurities seller on a blockchain platform according to one embodimentof the present invention. The tokenized securities seller (e.g., abroker, an investor) makes a request on the blockchain-based securitytoken platform to sell tokenized securities. The blockchain-basedsecurity token platform then checks approval from the company whooffered/issued the tokenized securities, checks rules for tradingtokenized securities for compliance, and authorizes the seller to sell.The tokenized securities seller then posts an ask on theblockchain-based security token platform, a buyer (e.g., a broker, aninvestor) accepts the ask on the blockchain-based security tokenplatform. If a buyer doesn't agree with the ask price, they can post abid price back to the seller. The seller and buyer can send bid and askprices back and forth until there is a mutual agreement where one partyaccepts the price of the other party. Once agreement has been made withthe acceptance of an ask or bid price, the blockchain-based securitytoken platform then checks rules and creates an escrow contract with theseller and the buyer, performing as an escrow account for the seller andthe buyer. The buyer makes payment to the escrow account, and the sellertransfers the tokenized securities the buyer intends to buy to theescrow account. The escrow account checks rules and processes thepayment, and then release the payment to the seller and the tokenizedsecurities to the buyer.

In one embodiment of the present invention, the blockchain-basedsecurity token platform is operable to modify a lifecycle of a contract,including but not limited to start, suspend, resume, or terminate. Inone embodiment, the proxy contract enables the contract ownershiptransfer from one unique identifier to another unique identifier basedon individual contractual terms being met or the contract completion. Inone embodiment, an escrow contract securely hides information fromparticipating parties other than the owner. In one embodiment, duringthe trading or transferring stage, the server computer of the tokenizedsecurities offering entity is operable to set minimum and/or maximumprices, timing, and approval on sales (or resales) of the tokenizedsecurities. In one embodiment, the server computer of tokenizedsecurities offering entity is operable to manage access control for theinformation related to the offering, trading, and transferring, forexample but not for limitation, if a potential tokenized securitiespurchaser can view or have access to disclosure documents including, butnot limited to, accreditation, brokers, dealers, employees, corporateofficers, competitors, location country, location state, income level.

Referring now to FIG. 17, a schematic diagram illustrating a cloud-basedcomputing network used in one embodiment of the invention forinteractions between user devices and a server computer of a tokenizedsecurities offering entity is shown. As illustrated, components of thesystems and methods include the following components and sub-components,all constructed and configured for network-based communication, andfurther including data processing and storage. As illustrated in FIG.17, a basic schematic of some of the key components of a financialsettlement system according to the present invention are shown. Thesystem 200 comprises a server 210 with a processing unit 211. The server210 is constructed, configured and coupled to enable communication overa network 250. The server provides for user interconnection with theserver over the network using a personal computer (PC) 240 positionedremotely from the server, the personal computer having instructions 247.Furthermore, the system is operable for use with at least one or amultiplicity of remote computers, computing devices, or terminals 260,270, having operating systems 269, 279 or software operable thereon. Forexample, a client/server architecture is shown. Alternatively, a usermay interconnect through the network 250 using a user device such as apersonal digital assistant (PDA), mobile communication device, or mobilecomputing device, such as by way of example and not limitation, a mobilephone, a cell phone, smart phone, tablet computer, laptop computer,wearable computing device, netbook, a terminal, or any other computingdevice suitable for network communication, whether wired or wireless.Also, alternative architectures may be used instead of the client/serverarchitecture. For example, a PC network, or other suitable architecturemay be used. The network 250 may be the Internet, an intranet, or anyother network suitable for searching, obtaining, and/or usinginformation and/or communications. The system of the present inventionfurther includes an operating system 212 installed and running on theserver 210, enabling server 210 to communicate through network 250 withthe remote, distributed user devices. The operating system may be anyoperating system known in the art that is suitable for networkcommunication as described hereinbelow. Data storage 220 may house anoperating system 222, memory 224, and programs 226.

Additionally or alternatively to FIG. 17, FIG. 18 is a schematic diagramof an embodiment of the invention illustrating a computer system andnetwork, generally described as 800, having a network 810 and aplurality of computing devices 820, 830, 840. In one embodiment of theinvention, the computer system 800 includes a cloud-based network 810for distributed communication via the network's wireless communicationantenna 812 and processing by a plurality of mobile communicationcomputing devices 830. In another embodiment of the invention, thecomputer system 800 is a virtualized or cloud-based computing systemcapable of executing any or all aspects of software and/or applicationcomponents presented herein on the computing devices 820, 830, 840. Incertain aspects, the computer system 800 may be implemented usinghardware or a combination of software and hardware, either in adedicated computing device, or integrated into another entity, ordistributed across multiple entities or computing devices.

By way of example, and not limitation, the computing devices 820, 830,840 are intended to represent various forms of digital computers 820,840, 850 and mobile devices 830, such as a server, blade server,mainframe, mobile phone, a personal digital assistant (PDA), a smartphone, a desktop computer, a netbook computer, a tablet computer, aworkstation, a laptop, and other similar computing devices. Thecomponents shown here, their connections and relationships, and theirfunctions, are meant to be exemplary only, and are not meant to limitimplementations of the invention described and/or claimed in thisdocument.

In one embodiment, the computing device 820 includes components such asa processor 860, a system memory 862 having a random access memory (RAM)864 and a read-only memory (ROM) 866, and a system bus 868 that couplesthe memory 862 to the processor 860. In another embodiment, thecomputing device 830 may additionally include components such as astorage device 890 for storing the operating system 892 and one or moreapplication programs 894, a network interface unit 896, and/or aninput/output controller 898. Each of the components may be coupled toeach other through at least one bus 868. The input/output controller 898may receive and process input from, or provide output to, a number ofother devices 899, including, but not limited to, alphanumeric inputdevices, mice, electronic styluses, display units, touch screens, signalgeneration devices (e.g., speakers) or printers.

By way of example, and not limitation, the processor 860 may be ageneral-purpose microprocessor (e.g., a central processing unit (CPU)),a graphics processing unit (GPU), a microcontroller, a Digital SignalProcessor (DSP), an Application Specific Integrated Circuit (ASIC), aField Programmable Gate Array (FPGA), a Programmable Logic Device (PLD),a controller, a state machine, gated or transistor logic, discretehardware components, or any other suitable entity or combinationsthereof that can perform calculations, process instructions forexecution, and/or other manipulations of information.

In another implementation, shown in FIG. 18, a computing device 840 mayuse multiple processors 860 and/or multiple buses 868, as appropriate,along with multiple memories 862 of multiple types (e.g., a combinationof a DSP and a microprocessor, a plurality of microprocessors, one ormore microprocessors in conjunction with a DSP core). Also, multiplecomputing devices may be connected via at least one network, with eachdevice providing portions of the necessary operations (e.g., a serverbank, a group of blade servers, or a multi-processor system).Alternatively, some steps or methods may be performed by circuitry thatis specific to a given function.

According to various embodiments illustrated in FIG. 18, the computersystem 800 may operate in a networked environment using logicalconnections to local and/or remote computing devices 820, 830, 840, 850through a network 810. A computing device 830 may connect to a network810 through a network interface unit 896 connected to the bus 868.Computing devices may communicate communication media through wirednetworks, direct-wired connections or wirelessly such as acoustic, RF orinfrared through a wireless communication antenna 897 in communicationwith the network's wireless communication antenna 812 and the networkinterface unit 896, which may include digital signal processingcircuitry when necessary. The network interface unit 896 may provide forcommunications under various modes or protocols.

In one or more exemplary aspects, the instructions may be implemented inhardware, software, firmware, or any combinations thereof. A computerreadable medium may provide volatile or non-volatile storage for one ormore sets of instructions, such as operating systems, data structures,program modules, applications or other data embodying any one or more ofthe methodologies or functions described herein. The computer readablemedium illustrated in FIG. 18 may include the memory 862, the processor860, and/or the storage media 890 and may be a single medium or multiplemedia (e.g., a centralized or distributed computer system) that storethe one or more sets of instructions 900. Non-transitory computerreadable media includes all computer readable media, with the soleexception being a transitory, propagating signal per se. Theinstructions 900 may further be transmitted or received over the network810 via the network interface unit 896 as communication media, which mayinclude a modulated data signal such as a carrier wave or othertransport mechanism and includes any delivery media. The term “modulateddata signal” means a signal that has one or more of its characteristicschanged or set in a manner as to encode information in the signal.

Storage devices 890 and memory 862 illustrated in FIG. 18 include, butare not limited to, volatile and non-volatile media such as cache, RAM,ROM, EPROM, EEPROM, FLASH memory or other solid state memory technology,disks or discs (e.g., digital versatile disks (DVD), HD-DVD, BLU-RAY,compact disc (CD), CD-ROM, floppy disc) or other optical storage,magnetic cassettes, magnetic tape, magnetic disk storage or othermagnetic storage devices, or any other medium that can be used to storethe computer readable instructions and which can be accessed by thecomputer system 800.

It is also contemplated that the computer system 800 may not include allof the components shown in FIG. 18, may include other components thatare not explicitly shown in FIG. 18, or may utilize an architecturecompletely different than that shown in FIG. 18. The variousillustrative logical blocks, modules, elements, circuits, and algorithmsdescribed in connection with the embodiments disclosed herein may beimplemented as electronic hardware, computer software, or combinationsof both. To clearly illustrate this interchangeability of hardware andsoftware, various illustrative components, blocks, modules, circuits,and steps have been described above generally in terms of theirfunctionality. Whether such functionality is implemented as hardware orsoftware depends upon the particular application and design constraintsimposed on the overall system. Skilled artisans may implement thedescribed functionality in varying ways for each particular application(e.g., arranged in a different order or partitioned in a different way),but such implementation decisions should not be interpreted as causing adeparture from the scope of the present invention.

One or more communications protocols and/or methods for wired orwireless communications over the at least one network may be used withthe present invention systems and methods.

The network-based communication can be wired or wireless using protocolssuch as, by way of example and not limitation, internet protocol (IP)including IPv4 and IPv6, cellular protocols 1G, 2G, 3G, 4G/LTE, and 5G,802.11, Zigbee, Bluetooth, or others currently available or developed inthe future. Also, by way of definition and description supporting theclaimed subject matter, preferably, the present invention includescommunication methodologies for messaging via a communication layer orfor data transmission or communication over at least one network asdescribed in the foregoing and in the following. IP-based communicationsover a network are most preferred for secure transmission, and fortransmission of data having at least one of a security, a priority, atransport route, and content. Correspondingly, and consistent with thecommunication methodologies for transmitting or communicating data fromthe platform or at least one server, or within a closed system, asdescribed hereinabove, according to the present invention, as usedthroughout this specification, figures and claims, the term “ZigBee”refers to any wireless communication protocol adopted by the Instituteof Electronics & Electrical Engineers (IEEE) according to standard802.15.4 or any successor standard(s), the term “Wi-Fi” refers to anycommunication protocol adopted by the IEEE under standard 802.11 or anysuccessor standard(s), the term “WiMAX” refers to any communicationprotocol adopted by the IEEE under standard 802.16 or any successorstandard(s), and the term “Bluetooth” refers to any short-rangecommunication protocol implementing IEEE standard 802.15.1 or anysuccessor standard(s). Additionally or alternatively to WiMAX, othercommunications protocols may be used, including but not limited to a“1G” wireless protocol such as analog wireless transmission, firstgeneration standards based (IEEE, ITU or other recognized worldcommunications standard), a “2G” standards based protocol such as “EDGE”or “CDMA 2000” also known as “1XRTT”, a 3G based standard such as “HighSpeed Packet Access (HSPA) or Evolution for Data Only (EVDO), anyaccepted 4G standard such as IEEE, ITU standards that include WiMAX,Long Term Evolution “LTE” and its derivative standards, any Ethernetsolution wireless or wired, or any proprietary wireless or power linecarrier standards that communicate to a client device or anycontrollable device that sends and receives an IP-based message. Theterm “High Speed Packet Data Access (HSPA)” refers to any communicationprotocol adopted by the International Telecommunication Union (ITU) oranother mobile telecommunications standards body referring to theevolution of the Global System for Mobile Communications (GSM) standardbeyond its third generation Universal Mobile Telecommunications System(UMTS) protocols. The term “Long Term Evolution (LTE)” refers to anycommunication protocol adopted by the ITU or another mobiletelecommunications standards body referring to the evolution ofGSM-based networks to voice, video and data standards anticipated to bereplacement protocols for HSPA. The term “Code Division Multiple Access(CDMA) Evolution Date-Optimized (EVDO) Revision A (CDMA EVDO Rev. A)”refers to the communication protocol adopted by the ITU under standardnumber TIA-856 Rev. A.

Certain modifications and improvements will occur to those skilled inthe art upon a reading of the foregoing description. By way of exampleand not limitation, the description describes a blockchain-basedplatform for investment activity that is automatically managed byelectronic smart contracts for at least one accredited investor.However, the SEC or other governing or regulatory authority, may providefor non-accredited participation in at least one investment opportunity,for which the platform would similarly function. In another example,while the description is focused on cryptocurrency illustrations, othercurrency equivalents may be provided for by the present invention. Theabove-mentioned examples are provided to serve the purpose of clarifyingthe aspects of the invention and it will be apparent to one skilled inthe art that they do not serve to limit the scope of the invention. Allmodifications and improvements have been deleted herein for the sake ofconciseness and readability but are properly within the scope of thepresent invention.

The invention claimed is:
 1. A system for performing transactions oftokenized securities during a tokenized securities offering, comprising:at least one user device and a server computer for a tokenizedsecurities offering entity in network communication with ablockchain-based securities token platform; and at least onesoftware-based blockchain oracle connected to the server computerconfigured to search for accreditation information in a multiplicity ofinvestor accreditation databases in real time, wherein the multiplicityof investor accreditation databases include different data sourcesconfigured to be accessed over the Internet by the at least onesoftware-based blockchain oracle; wherein the server computer isconfigured to create the tokenized securities and deploy tokenizedsecurities contracts for the tokenized securities on theblockchain-based securities token platform; wherein the at least oneuser device is configured to transmit user input data to the servercomputer for the tokenized securities offering entity for registering topurchase at least one securities token via a graphic user interface(GUI); wherein the at least one software-based blockchain oracle isconfigured to retrieve and normalize the accreditation information fromthe multiplicity of investor accreditation databases including thedifferent data sources in real time, wherein the server computer updatesa whitelist of accredited investors based on the normalizedaccreditation information; wherein the server computer is configured toverify an accreditation status based on the user input data and thewhitelist of accredited investors, and is further configured to send alink to documents related to the at least one securities token to the atleast one user device; wherein the at least one user device isconfigured to review and sign the documents related to the at least onesecurities token; wherein the blockchain-based securities token platformis configured to generate a unique hash value for each of the documentsreviewed and signed by the at least one user device based on a securehash algorithm; wherein the documents related to the at least onesecurities token comprise mandatory documents, and wherein theblockchain-based securities token platform receives confirmation throughuse of at least one watermark that the mandatory documents have beendownloaded by the at least one user device; wherein the at least oneuser device is configured to transmit a predetermined amount of currencyfor the at least one securities token from a uniquely identified accountto an escrow account on the blockchain-based securities token platform,and receive the at least one securities token in the uniquely identifiedaccount; wherein the blockchain-based securities token platform isconfigured to record the tokenized securities contracts for thetransactions of the tokenized securities on a blockchain; and whereinthe whitelist is recorded and updated on the blockchain-based securitiestoken platform.
 2. The system of claim 1, wherein the documents relatedto the at least one securities token further comprise non-mandatorydocuments, wherein the mandatory documents comprise a Private PlacementMemorandums (PPM), a Contract of Securities Offering, PricingAdjustments, or a Purchase Agreement, and wherein the non-mandatorydocuments comprise Company Bylaws, Contracts, Licensing Agreements, orWhitepapers.
 3. The system of claim 1, wherein the at least one userdevice is configured to trigger an off-blockchain transaction for apredetermined amount of fiat currency for the at least one securitiestoken from a bank account using an escrow contract on theblockchain-based securities token platform.
 4. The system of claim 1,wherein the server computer is configured to create a marketplace forexchanging securities tokens a predetermined period of time after thetokenized securities offering is ended.
 5. The system of claim 1,wherein the tokenized securities contracts comprise at least one proxycontract configured for contract ownership transfer from one uniqueidentifier to another unique identifier based on individual contractualterms being met or completion of the contracts.
 6. The system of claim1, wherein the blockchain-based securities token platform is configuredto provide aggregate sales and aggregate purchases of the tokenizedsecurities.
 7. The system of claim 1, wherein the escrow account on theblockchain-based securities token platform is configured to hold thepredetermined amount of currency and the at least one securities tokenuntil a predetermined threshold is reached for release, and wherein thepredetermined threshold is selected from a group consisting of a date, anumber of investors invested, and a minimum raise from the tokenizedsecurities offering.
 8. The system of claim 1, wherein theblockchain-based securities token platform is configured to group thetokenized securities contracts by at least one predetermined rule. 9.The system of claim 1, wherein the blockchain-based securities tokenplatform provides a trustee account or a centralized wallet tofacilitate transactions with fiat currencies and non-acceptedcryptocurrencies.
 10. A method for performing transactions of tokenizedsecurities during a tokenized securities offering, comprising: providingat least one user device and a server computer for a tokenizedsecurities offering entity in network communication with ablockchain-based securities token platform; the server computerdeploying tokenized securities contracts on the blockchain-basedsecurities token platform; the at least one user device transmittinguser input data for registering to purchase at least one securitiestoken with the server computer via a graphic user interface (GUI); atleast one software-based blockchain oracle connected to the servercomputer searching for accreditation information in a multiplicity ofinvestor accreditation databases in real time, wherein the multiplicityof investor accreditation databases include different data sourcesconfigured to be accessed over the Internet by the at least onesoftware-based blockchain oracle; the at least one software-basedblockchain oracle retrieving and normalizing the accreditationinformation from the multiplicity of investor accreditation databases inreal time; the server computer updating a whitelist of accreditedinvestors based on the normalized accreditation information; the servercomputer verifying an accreditation status based on the user input dataand the whitelist of accredited investors; the server computer sending alink to documents related to the at least one securities token to the atleast one user device; the at least one user device reviewing andsigning the documents related to the at least one securities token; theblockchain-based securities token platform generating a hash value forthe documents reviewed and signed by the at least one user device; theat least one user device transmitting a predetermined amount of currencyfrom a uniquely identified account to an escrow account on theblockchain-based securities token platform, and receiving the at leastone securities token in the uniquely identified account, thereby makinga transaction for the at least one securities token; theblockchain-based securities token platform recording at least onetokenized securities contract for the transaction of the at least onesecurities token; and the server computer recording the whitelist on theblockchain-based securities token platform; wherein the documentsrelated to the at least one securities token comprise mandatorydocuments, further comprising the blockchain-based securities tokenplatform receiving confirmation through use of at least one watermarkthat the mandatory documents have been downloaded by the at least oneuser device.
 11. A method for performing transactions of tokenizedsecurities during a tokenized securities offering, comprising: providingat least one user device and a server computer for a tokenizedsecurities offering entity in network communication with ablockchain-based securities token platform; the server computerdeploying tokenized securities contracts on the blockchain-basedsecurities token platform; the at least one user device registering topurchase at least one securities token by transmitting user input datato the server computer via a graphic user interface (GUI); at least onesoftware-based blockchain oracle connected to the server computersearching for accreditation information in a multiplicity of investoraccreditation databases in real time, wherein the multiplicity ofinvestor accreditation databases include different data sourcesconfigured to be accessed over the Internet; the at least onesoftware-based blockchain oracle retrieving and normalizing theaccreditation information from the multiplicity of investoraccreditation databases in real time; the server computer updating awhitelist of accredited investors based on the normalized accreditationinformation; the server computer verifying an accreditation status basedon the user input data and the whitelist of accredited investors; theserver computer verifying an accreditation status based on the userinput data, and sending a link of documents related to the at least onesecurities token to the at least one user device upon verification; theat least one user device reviewing and signing the documents related tothe at least one securities token; the blockchain-based securities tokenplatform generating a hash value for the reviewed and signed documentsby the at least one user device; the at least one user devicetransmitting an amount of currency from a uniquely identified account toan escrow account on the blockchain-based securities token platform, andreceiving the at least one securities token in the uniquely identifiedaccount, thereby letting at least one tokenized securities contract fora transaction of the at least one securities token; the blockchain-basedsecurity token platform recording the at least one tokenized securitiescontract for the transaction of the at least one securities token; andthe server computer recording the whitelist on the blockchain-basedsecurities token platform; wherein the at least one securities tokenincludes a Blockchain Instrument for Transferrable Equity (BITE) token,wherein the BITE token represents common stock, preferred stock,options, warrants, convertible notes, restricted stock units, and/oremployee stock options, and wherein the BITE token is offered at adiscounted price during a presale period, wherein an initial price isset by the tokenized securities offering entity, and the discountedprice is based on settings of price adjustment and adjustment frequencyin BITE token contracts deployed on the blockchain-based securitiestoken platform.
 12. The method of claim 11, wherein each tokenizedsecurities contract has a unique identifier.
 13. The system of claim 1,wherein the tokenized securities offered by the tokenized securitiesoffering entity are Blockchain Instrument for Transferrable Equity(BITE) tokens, wherein the BITE tokens represent common stock, preferredstock, options, warrants, convertible notes, restricted stock units,and/or employee stock options, and wherein the server computer isconfigured to receive a return of the BITE tokens upon payment of arestocking fee, and wherein the server computer is configured to offerthe BITE tokens for sale after restocking the BITE tokens.
 14. Thesystem of claim 1, wherein the tokenized securities offered by thetokenized securities offering entity are Blockchain Instrument forTransferrable Equity (BITE) tokens, wherein the BITE tokens representcommon stock, preferred stock, options, warrants, convertible notes,restricted stock units, and/or employee stock options, wherein the BITEtokens are offered at a discounted price during a presale period,wherein an initial price is set by the tokenized securities offeringentity, and the discounted price is based on settings of priceadjustment and adjustment frequency in BITE token contracts deployed onthe blockchain-based securities token platform.
 15. The method of claim10, wherein the tokenized securities offered by the tokenized securitiesoffering entity are Blockchain Instrument for Transferrable Equity(BITE) tokens, wherein the BITE tokens represent common stock, preferredstock, options, warrants, convertible notes, restricted stock units,and/or employee stock options, and wherein the server computer isconfigured to receive a return of the BITE tokens upon payment of arestocking fee, and wherein the server computer is configured to offerthe BITE tokens for sale after restocking the BITE tokens.
 16. Themethod of claim 10, wherein the tokenized securities offered by thetokenized securities offering entity are Blockchain Instrument forTransferrable Equity (BITE) tokens, wherein the BITE tokens representcommon stock, preferred stock, options, warrants, convertible notes,restricted stock units, and/or employee stock options, wherein the BITEtokens are offered at a discounted price during a presale period,wherein an initial price is set by the tokenized securities offeringentity, and the discounted price is based on settings of priceadjustment and adjustment frequency in BITE token contracts deployed onthe blockchain-based securities token platform.
 17. The method of claim11, wherein the documents related to the at least one securities tokencomprise mandatory documents, further comprising the blockchain-basedsecurities token platform receiving confirmation through use of at leastone watermark that the mandatory documents have been downloaded by theat least one user device.